Optus chief executive Paul O’Sullivan has warned of new “dangerous” players in the telecommunications market that could create monopolies in the field of content and applications, flagging iconic US technology giants Google and Apple specifically as being worthy of attention.
In a wide-ranging speech delivered at the Kickstart Forum on the Gold Coast this week, O’Sullivan said the multi-billion dollar investment the Federal Government was ploughing into the National Broadband Network, with the aim of boosting broadband and competition in the telco sector, would be limited in its return if the areas of content and applications online were not addressed as well.
“In fact we’ve seen similar developments in the US, where the US government has been tackling some of the issues around Apple, and the limitations it places on developers being able to work with that software, and with their app store,” he said.
O’Sullivan said device manufacturers like Apple were “trying to create closed ecosystems”, or extending their domain out beyond the initial applications which they had become famous for. Google’s Voice application, which is not yet available in Australia but is acting as an intermediary for mobile telcos in the US, was one example, he said.
O’Sullivan said such issues were relatively new to the telecommunications industry in Australia, which for the past twenty to thirty years had focused on regulations around providing open, competitive access at the network infrastructure layer – for example, gaining access to Telstra’s copper network. “We are not used to, nor have we applied the resources, to develop the thinking around content and apps. I would expect that you’re going to see a big shift in this territory over the next couple of years,” the Optus chief said.
In addition, O’Sullivan claimed that companies like Google and eBay had achieved a “winner take all” dominance over the internet.
“There is a huge cliff edge for any second entrant which wants to be a challenger in those application areas,” he said, highlighting the problems being suffered by Telstra advertising and search division Sensis – which has recently revealed it’s suffering sharply as a result of the decline in interest in print advertising.
O’Sullivan suggested that “hyperlinks” could be placed on the websites of companies like Google and eBay, linking to competitors – or even that the traffic for such sites could be auctioned to provide access for “others who might bid to hold that auction, or for providing that search at a better price”.
The Optus chief’s comments go some way to echoing concerns raised by his counterpart at Telstra, David Thodey, who last year criticised Apple for what he described as its “quite contained” iPhone ecosystem and “walled garden” approach. In comparison with Apple’s ecosystem, Thodey said Google was more open, although it still had some way to go. “I won’t say Google is open – I would wash my mouth out if I said it was open – but it’s more open than an Apple world,” he said.
The issue of content being provided over telco’s networks also hit headlines last week with the news that iiNet had prevailed in an appeal by the Australian Federation Against Copyright Theft in its high-profile case against the ISP for allowing its users to download copyrighted films and TV shows via the BitTorrent file-sharing platform.
O’Sullivan was asked whether Optus was up to taking the fight to the various companies – such as the Time Warner empire. “You do know the content people are much nastier than Telstra, don’t you?” one journalist asked.
“You can say that and I can’t,” laughed O’Sullivan in reply.